In re Mega Marine Spares India Private Limited (CAAR Mumbai)
Mega Marine Spares India Private Limited has applied to the Customs Authority for Advance Rulings (CAAR), Mumbai, seeking clarification on the Integrated Goods and Services Tax (IGST) rate for marine engines, their spares, and marine gearboxes. The company, involved in trading these items to the fishing community and boat builders across India, proposes that these goods, despite their primary HSN codes (8408, 8409, 8483), should be eligible for a 5% IGST rate as per Serial No. 252 of Schedule I of Notification No. 01/2017-IGST (Rate) dated June 28, 2017. This notification specifies a 5% rate for “Parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907” from “Any Chapter,” provided they are ultimately used as parts of fishing vessels (classified under HSN 8902).
The applicant’s submission highlights that marine engines and gearboxes are integral and essential components for the functioning of fishing vessels. They contend that without these items, a fishing boat cannot operate, thus qualifying them as “parts” of fishing vessels, irrespective of their original chapter classification. The company provided technical definitions of marine engines and gearboxes, detailing their functions and certifying that they are exclusively used in marine vessels and not in other industries like automobiles. They also submitted certificates from a Chartered Accountant, State Tax Officer, Assistant Director of Fisheries, and a Chartered Engineer to substantiate the end-use and necessity of these products for fishing vessels. Furthermore, Mega Marine Spares India Private Limited referenced a clarification issued by the Tax Research Unit (TRU) of the Ministry of Finance (Circular No. 52/26/2018-GST dated August 9, 2018), which explicitly states that marine engines for fishing vessels (HSN 8408 1093) attract a 5% GST rate as they are considered parts of fishing vessels under S. No. 252 of Schedule I. They also cited several past judicial rulings and advance rulings that support the principle that “parts of parts” can be considered parts of the main product for classification and exemption purposes. The Jurisdictional Commissioner of Customs, Tuticorin, in their comments, also referred to the TRU circular and past advance rulings supporting the applicant’s stance on the 5% IGST applicability for both marine engines and marine gearboxes when used as parts of fishing vessels.
